One imperative of running a successful firm in India is to make sure your employees stay safe at work. There are certain businesses, such as factories, construction sites or mines, where the workforce is highly vulnerable to health, safety and life hazards. In case of any workplace accidents, the employer is typically held liable to pay compensation to the injured workers.
Imagine the financial loss that business owners face if workplace hazards were to occur frequently. This is where the need for worker or employee compensation insurance arises.
Some business owners misinterpret the importance of workmen’s compensation. They think they won’t need it because of the low risk of workplace hazards in their case.
If you are a business owner in India, you are legally responsible to provide workmen’s compensation as and when an unfortunate event occurs. Irrespective of the industry your business falls into, you must abide by the Workmen’s Compensation Act.
What is the Workmen’s Compensation Act?
It is a legal act that aims to provide compensation to workers or their dependents in case of injury or accident arising during the employment tenure. This also includes occupational diseases, permanent disability, or death. This act applies to every employee or employer in any capacity as specified in its Schedule II.
The amount of compensation that an employer is liable to pay in case of workplace accidents depends on the nature of the injury, age of the injured individual and his monthly earnings.
The Importance of Employee Compensation Insurance
As an employer, you can control the occurrence of workplace hazards to an extent. However, there is always the slight risk of unexpected accidents occurring at work. An employee compensation insurance policy safeguards all your employees against workplace injuries. It is a cost-effective way to deal with the significant expenses that may come up unexpectedly at any time during work hours.
As per law, it is mandatory for you to buy employee compensation insurance, even if you have hired only one worker in your firm. There are many advantages of purchasing this insurance policy.
- Medical Expense Coverage
A workplace injury can result in a small injury that needs simple treatment like a bandage, or a serious one like a bone fracture. Depending on the severity of the injury, you need to pay for the cost of medical treatment if you do not have an active employee compensation insurance plan.
However, you can avoid paying for these expenses by buying workmen’s compensation insurance policy. The chosen insurer will pay for medical treatment that employees need in case of workplace accidents.
- Legal Liability Coverage
Workplace accidents can become the cause of lawsuits filed against your firm for not maintaining safety in your office or factory.
Consider the case wherein an employee lost all the fingers of his hands while working in a manufacturing unit. His agitated family members then filed a lawsuit against the employer to get hefty compensation.
In such situations, hiring an expert lawyer is an expensive affair. But you need not worry about the defense cost if you have an employee compensation insurance policy. It will cover your legal liability against such accidents.
The employee compensation insurance policy also pays for the compensation awarded by the local labor court or other authorities.
- Tax Benefits
Just like group health insurance, the premium you pay for an employee compensation insurance policy is non-taxable. It means you can claim a tax deduction to reduce your tax liability.
As detailed above, employee compensation insurance is not just useful for some specific types of businesses, but for all businesses. In case you are unaware of the crucial points to consider before you buy this insurance policy, connect with good insurance brokers, like SecureNow. Their team will manage the various aspects related to the insurer, surveyor and TPA.